Corporate Climate Change Initiatives and Stock Returns

This paper aims to explore the effects of climate change risks and corporate sustainability initiatives on stock returns and firm value. The primary motivation is four-fold: (1) addressing the limitations of traditional asset pricing models that focus solely on market-risk premium; (2) acknowledging the increasing vulnerabilities corporations face due to physical, transition, and liability risks associated with the global climate crisis; (3) examining the simultaneous effects of corporate sustainability and climate risks on firm value and risk-adjusted stock returns; and (4) contributing to multiple strands of literature including corporate sustainability, asset firm value, investment risk, and returns. By integrating climate risk factors into traditional asset pricing models, this research sheds light on investment strategies that adapt to environmental and climate change. Vigdis W Boasson is a senior finance professor at Central Michigan University's College of Business Administration. She holds two PhDs in Finance and International Business from the State University of New York at Buffalo. Dr. Boasson has developed interdisciplinary approaches to corporate financial analysis and has published numerous high-quality academic papers in renowned journals such as the Journal of Business. She has received several awards for teaching excellence at Central Michigan University and has served as an exchange rate research scientist at the Central Bank of Iceland and as a financial advisor to the Icelandic government.